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NSE Intra-day chart (11 January 2022)
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Market Commentary 12 January 2022
Markets likely to get optimistic start on firm global cues; IIP, CPI eyed

 

Indian equity benchmarks ended higher for the third day in a row in a choppy session on Tuesday led by gains in Power, Utilities and IT stocks. Key gauges were volatile in early morning trade after opening on a slightly positive note, as traders were concerned with a private report stating that sluggish growth momentum in the December quarter and emerging risk from the third Covid-19 wave may shave 80 basis points (bps) off India's real gross domestic product (GDP) growth to 9 per cent for FY22. Some cautiousness came in as data from the Reserve Bank of India (RBI) showed outward foreign direct investment by Indian companies fell by over 8 per cent to $2.05 billion in December 2021 in the current fiscal. Adding to the pessimism, a domestic rating agency said lockdowns to contain the spread of the third COVID wave hurt loan collections and new lending by non-banks, and will in turn impact securitisation volumes. Rising coronavirus cases also dampened sentiments in the markets. However, key indices inched up as they recovered from some early morning volatility, taking support from the Quarterly Employment Survey (QES) report released by Union Labour Minister Bhupender Yadav stating that total employment in nine select sectors stood at 3.10 crore in the July-September 2021 quarter (Q2FY22), which is 2 lakh more than that of the April-June period. He said the rise shows improvement in economic activities after lifting of lockdown restrictions by states to curb the spread of deadly virus after the second wave of the COVID-19 pandemic hit the country in April 2021. Traders got support after Tata group's Chairman N Chandrasekaran said that coronavirus pandemic has not impacted India's long-term growth trajectory although it has delayed it and in this decade, the country will lead the global growth rates. Finally, the BSE Sensex rose 221.26 points or 0.37% to 60,616.89 and the CNX Nifty was up by 52.45 points or 0.29% to 18,055.75.

                                            

The US markets ended higher on Tuesday, with tech-related shares extending a bounce from the previous session, after Federal Reserve Chair Jerome Powell testified before a Senate Banking Committee hearing on his nomination for another term. In prepared remarks, Powell highlighted elevated inflation as a result of supply chain issues and said the Fed would use all of its tools to prevent higher inflation from becoming entrenched. Powell said We can begin to see that the post-pandemic economy is likely to be different in some respects. The pursuit of our goals will need to take these differences into account.' He added to that end, monetary policy must take a broad and forward-looking view, keeping pace with an ever-evolving economy. On the sectoral front, energy stocks moved sharply higher on the day, benefiting from a substantial increase by the price of crude oil. Crude for February delivery spiked $2.99 to $81.22 a barrel. Reflecting the rally by energy stocks, the Philadelphia Oil Service Index soared by 4.3 percent and the NYSE Arca Oil Index shot up by 3.5 percent. Significant strength also emerged among gold stocks, as reflected by the 2.1 percent jump by the NYSE Arca Gold Bugs Index. The strength in the gold sector came amid a notable increase by the price of the precious metal, with gold for February delivery surging $19.70 to $1,818.50 an ounce. Housing, airline, and semiconductor stocks also saw considerable strength on the day, while interest rate-sensitive utilities stocks moved to the downside.

 

Crude oil futures ended higher with rally of over three and half percent on Tuesday. Hopes that the spread of the Omicron variant will not derail the global economy and adversely impact energy demand supported oil prices. Federal Reserve Chairman Jerome Powell said that he expects the economic impact of the new variant to be short-lived and that upcoming quarters may be positive for the economy. Meanwhile, the recent outages in Libya and a weak U.S. dollar also contributed to the increase in oil prices. Benchmark crude oil futures for February delivery rose $2.99 or 3.8 percent to settle at $81.22 a barrel on the New York Mercantile Exchange. Brent crude for March delivery gained $2.96 or 3.7 percent to settle at $83.83 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended substantially stronger on fresh selling of American currency by banks and exporters. Besides, healthy growth in the domestic equity market and dollar weakness against other currencies overseas added to the rupee gains. Traders got support after Tata group's Chairman N Chandrasekaran said that coronavirus pandemic has not impacted India's long-term growth trajectory although it has delayed it and in this decade, the country will lead the global growth rates. On the global front, dollar slipped on Tuesday but was stuck within recent ranges as investors waited for U.S. Federal Reserve Chair Jerome Powell to speak at a congressional hearing later in the day. Finally, the rupee ended 73.94, stronger by 11 paise from its previous close of 74.05 on Monday.

 

The FIIs as per Tuesday's data were net sellers in both equity and debt segment. In equity segment, the gross buying was of Rs 6155.00 crore against gross selling of Rs 6300.41 crore, while in the debt segment, the gross purchase was of Rs 714.18 crore against gross selling of Rs 1213.87 crore. Besides, in the hybrid segment, the gross buying was of Rs 1755.14 crore against gross selling of Rs 6.40 crore.

 

The US markets ended higher on Tuesday after Powell's comments likely reassured investors that the Fed was not going to prioritize inflation reduction above everything else, including employment. Asian markets are trading in green on Wednesday following overnight gains on Wall Street. Indian markets ended a choppy session slightly higher on Tuesday amid optimism over the earnings seasons. Today, benchmarks are likely to start higher, extending gains for the fourth straight session, amid strong cues from their global peers. Investors will be eyeing the industrial growth and retail inflation data to be out later in the day. Sentiments will get a boost as the World Bank retained its FY22 growth forecast for India at 8.3 per cent but upgraded it to 8.7 per cent for FY23, from 7.5 per cent estimated earlier, citing improving growth prospects, especially a reviving private capex cycle. Traders will be taking encouraged as preliminary data from the commerce ministry showed that the country's exports grew 33.16 per cent to $7.63 billion during January 1-7 period on account of healthy performance by various sectors, including engineering, petroleum and gems and jewellery. Some support will come as former chief economic adviser Arvind Virmani said the Indian economy is likely to register a growth of 9.5 per cent in this financial year. Virmani said that government expenditure and exports have peaked, but so far private consumption has not recovered due to the COVID-19 pandemic. also, RAI said retail sales in December last year grew by 7 per cent over the pre-pandemic levels of the same period in 2019 but the pace dropped towards the last week of the month under review due to the third COVID wave. There will be some buzz in the road sector stocks as rating agency Icra said that high Wholesale Price Index (WPI) inflation is a blessing in disguise for toll road projects as toll collections are set to witness 14-15 per cent growth in 2022-23. IT stocks will be in focus ahead of their quarterly earnings to be announced after market hours. Telecom stocks too will be in limelight with the three leading telcos seeking 90-95 per cent reduction in base price of 5G spectrum auction. There will be some reaction in edible oil industry stocks as the Centre said retail prices of edible oils across the country are ruling higher than a year-ago period in line with the global market but from October 2021 onwards, there is a declining trend.

 

Support and Resistance: NSE (Nifty) and BSE (Sensex)

 

Index

Previous close

Support

Resistance

NSE Nifty

18,055.75

17,986.35

18,103.20

BSE Sensex

60,616.89

60,369.19

60,776.92

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Tata Motors

162.69

500.80

496.66

506.41

State Bank of India

161.07

505.75

500.74

509.29

Oil & Natural Gas Corporation

144.57

160.85

158.41

162.46

NTPC

119.71

132.20

130.80

133.80

Bharti Airtel

106.42

703.00

695.21

710.16

 

  • L&T's Heavy Engineering arm has dispatched two large Ethylene Oxide Reactors, weighing 1,200 Tons each from Hazira, Gujarat to a large petrochemical complex overseas. 
  • Axis Bank has executed a maiden domestic trade transaction on Government of India backed blockchain platform, Secured Logistics Document Exchange. 
  • BPCL has reportedly inaugurated a superabsorbent polymer technology demonstration plant of 200 tonne per annum at the Kochi Refinery.
  • TCS has been successfully leveraging Nuvepro Hands-On Labs to help its employees get practical experience on real-world environments, accurately assess their tech skills, and re-skill / upskill them for future projects.
News Analysis